We ended 2023 on a holiday note (see our round-up of 2023) and we are starting 2024 on the same topic. 

Before the accusations fly that we have slid into 2024 with no imagination, can I suggest you blame the Government? On 1 January 2024 when most of us were waking up to yet more rain and some with a nasty headache from the night before, the Government published guidance to be read alongside their draft Regulations (The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023) published in November on holiday entitlement (read our blog or better still listen to our podcast). 

The purpose of this blog is twofold.

• Provide an overview of the Guidance and its practical implications; and
• Outline other parts in the Regulations which were outshone by the holiday entitlement provisions!

Government guidance on holiday entitlement

The Guidance is not extensive and notes that “it does not provide definitive answers to all individual queries”.  We would advise that you read it and we would flag the following points;

The definitions of the new categories of workers to whom the new holiday pay rules apply are set out in the Regulations and are ambiguous. Our view, however, is that the Guidance makes the position even less clear!

The particular challenge is workers who are paid by equal monthly instalments but are engaged or work part-year only. The Regulations state that part-year workers must have a period of at least a week when they are not required to work nor are they paid.  The example used in the Guidance suggests that this definition would not apply to a worker who is paid once a month throughout the year but has periods of time when they are not working (longer than a week) because they receive pay during those weeks.  This would be problematic for employers who have workers who work part-year but have their salary equalised over the 12 months as is often the case in education*. We would suggest seeking advice in relation to those workers as it is arguable, applying this example, that they would still be entitled to 5.6 weeks' holiday as per the Brazel decision.    

The second issue relates to Irregular Hours workers whose contracts, under the definition in the Regulations, must state that their hours are wholly or mostly variable. The Guidance does not, however, address a situation where a worker is employed under a zero-hours contract but works regular hours during each pay period. Would the contract variance trump the reality or vice versa? We would have hoped for more clarity in the Guidance, but we fear it may only come now through long-fought tribunal cases. 

One piece of clarity we do have is regarding shift work. Shift workers, where the shift pattern is regular, will not be irregular workers.  Therefore the 12.07% and rolled up holiday pay provisions will not apply.

Additional changes/confirmation of holiday entitlement

Another milestone along the Brexit journey was ‘celebrated’ on 31 December 2023.  From 1 January 2024, certain decisions interpreting EU Legislation which had become part of UK law and practice will no longer apply. Some of these decisions affected holiday entitlement and so the Government used the November draft Regulations to codify/confirm these rights into UK law.  These will take effect from 1 January 2024.

Leave carry over

Untaken leave which a worker was entitled to but unable to take because they were absent on statutory leave (maternity/paternity/adoption or shared parental leave) can be carried over into the following year's leave. Similarly, untaken leave because the worker was absent on sick leave, can be carried over. But that leave must be taken within 18 months of the end of the leave year when the entitlement arose. 

When leave is restricted

If an employer fails to recognise a worker’s right to paid annual leave under the WTR (usually because they don’t agree on worker status) or an employer fails to inform employees of their leave and the risk they might lose it, then any untaken leave can be carried over. The untaken leave must be taken in the leave year after the one where they were unable to take their leave. 

Records

The burden to keep records to demonstrate compliance with the WTR has been lessened.  Employers will only be required to keep ‘adequate records’ to demonstrate compliance on limits for night work, working week and young workers’ night work. They will not need to record each worker’s daily working hours if they are able to demonstrate compliance without doing so. However, the requirement to keep accurate records under the National Minimum Wage remains, and providers should be very careful to ensure that such records are available to avoid any NMW issues. 

Week’s pay 

Normal pay for the purpose of calculating holiday (for Reg 13 holiday entitlement) will include; 

• payments (including commission) which are intrinsically linked to the performance of tasks; 
• payments related to professional or personal status relating to length of service or seniority or professional qualifications; 
• other payments including overtime which have been regularly paid in the preceding 52 weeks. 

The issue of bonuses and whether they are included remains unclear as neither the draft Regulations nor the Guidance clarify the position. Again, something for the courts to discuss. 

Action points

• Ensure your relevant systems calculate holiday entitlement during any period of statutory leave or sick leave and this entitlement is communicated to the employee
• Likewise, ensure your systems prompt employees of their holiday entitlement, warning them of the ‘use it lose it’ mantra
• If there is any query regards status be aware of knock-on effects on holiday entitlement
• Are your record-keeping systems sufficient to demonstrate compliance? Do they need improving or conversely could you relax some of the systems?
• Are your pay calculations sufficiently detailed to include the payments outlined above?  Do you need to seek specific advice regards bonus payments?

TUPE 

This is not a codifying of existing case law but a tweaking of the information and consultation provisions.  After 1 July 2024, when an employer employs fewer than 50 employees or fewer than 10 employees are transferring under TUPE, then the employer of the affected employees can consult with those employees individually where there are no elected representatives in place already. Previously, this only applied to employers who employed less than 10 employees. 

As ever, if you would like to discuss any of the issues raised above, please contact a member of our employment and pensions team. 

 *if you would like to discuss this issue in more detail in respect of term time-only workers in education, please contact Katherine.sinclair@anthonycollins.com who leads our education work.